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The Norwegian Government Pension Fund, one of the largest sovereign wealth funds in the world and well known for investing its money responsibly, is to take a more active approach to its investments after reviewing its ethical guidelines.

The 2.5 trillion kroner (€315bn) fund - managed by Norges Bank, the country's central bank - is well known for its approach to ethical investments. In the past it has spurned arms manufacturers, mining companies, and US retailer Wal-Mart due to ethical concerns.

Sigbjørn Johnsen, Norway's minister of finance, said yesterday that a review conducted last year largely supported the principles behind the previous ethical guidelines, which were established in 2004. But he added that the fund's asset manager would take a more active approach to engaging with its investments over ethical concerns.

He said: "The new guidelines for Norges Bank include a new, ambitious requirement of generally integrating considerations of good corporate governance and environmental and social issues into investment activities. This reflects international developments."

He said yesterday that the old principles are being replaced by two new guidelines: one focused on the exclusion and observation of companies, and the other focused on responsible management and the exercise of ownership rights. The guidelines affect how Norges Bank can invest the assets of the fund, and Johnsen said: "We are increasingly attaching importance to Norges Bank’s active ownership."

Since the review last year, the asset manager has already made some changes to the fund's holdings. In January, it dropped 17 tobacco producers from the fund's portfolio. Johnsen confirmed yesterday that tobacco production has been introduced as a new criterion for excluding a stock from the fund's portfolio.

He said: "In addition to the new guidelines, we are also well underway with implementation of other measures that were decided in connection with the evaluation. These include an environmental investment programme and a major research project on climate change and its possible impacts on the financial markets. The Ministry of Finance has also signed the UN Principles for Responsible Investment, which Norges Bank has helped develop and has signed.”

Norges Bank also announced today that it would again allow investment in United Technologies. It had disallowed investment in the company in 2005, thanks to its involvement in nuclear arms testing. It said today that "the company no longer is involved in the activities that formed the basis for its exclusion".

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Last year's ethical review overlapped with another report commissioned by Norges Bank into the merits of active management. It revealed last month that active management did add value for the fund over the last ten years, but the returns net of fees amounted to a fraction of a percentage point, leading the authors of the report to argue for the fund to manage active portfolios in-house rather than pay external managers to do so.